HB 575, HCA 1 -- MOTOR VEHICLE FRANCHISE

CO-SPONSORS:  O'Connor, Abel, Foley

COMMITTEE ACTION:  Voted "do pass" by the Committee on Motor
Vehicle and Traffic Regulations by a vote of 9 to 0.

This bill makes several changes to the Motor Vehicle Franchise
Law.

RELEVANT MARKET AREA

The bill will prohibit manufacturers from approving, without
good cause, the establishment or relocation (unless relocation
is within 2 miles of the current place of business) of a
franchise within 6 miles of a same line-make existing franchise
in a county with a population of over 100,000 and within 10
miles in a county with less than 100,000 population.

ADMINISTRATIVE HEARING COMMISSION

The Administrative Hearing Commission will hear franchise
disputes.  A party seeking relief may file an application for a
hearing.  The commission will then enter an order setting a
date, time, and place for a hearing on the record for all
parties.  The bill places a hold on any franchisor action
requiring "good cause" when the action is protested by a
franchisee and the administrative law judge determines that good
cause does not exist.  The time line for commission decisions is
adjusted.  Parties are allowed to obtain discovery in the same
manner as other civil actions.  Appeals are provided for, and
jurisdiction is in Cole County.

DUALING

The bill prohibits manufacturers from interfering with a
franchisee's desire to add an additional franchise in their
existing or separate dealership facility.  This provision does
not apply unless a franchisee maintains a reasonable line of
credit for each make or line, stays in compliance with the
franchise and any reasonable facilities requirements, and has
made no change in the principal management of the franchisee.

FRANCHISE WITHIN A FRANCHISE

Manufacturers are prohibited from failing to sell franchisees
all line-makes available.  Certain reasonable conditions apply.

FACTORY-OWNED DEALERSHIPS

The bill prohibits factory-owned dealerships, except:

(1)  For a temporary period of time if a dealership is for sale
at a reasonable price, terms, and conditions to an independent
qualified buyer; or

(2)  In a bona fide relationship with an independent person who
is required to make a significant investment in the dealership
subject to loss and operates the dealership and can reasonably
expect to acquire full ownership within a reasonable time and
under reasonable terms and conditions.

DIRECT RETAIL SALES

Manufacturers are prohibited from selling new vehicles directly
to retail consumers unless they are manufacturer employees,
not-for-profit organizations, or governments.

WARRANTY PROVISIONS

The bill requires manufacturers to compensate franchisees for
all warranty parts, work, and services at reasonable
compensation which, for labor, is defined as the prevailing wage
rate being paid in the franchisee's community but will not be
less than retail or that charged to non-warranty customers.
Additionally, it will prohibit manufacturers from:

(1)  Reimbursing franchisees later than 30 days after approval
to perform warranty work; and

(2)  Charging back approved work, unless fraud or
unsubstantiated work can be proven, and even if it can be
proven, charge backs for fraud cannot occur later than 2 years.
Charge backs for unsubstantiated work cannot occur later than 15
months.

HCA l -- Excludes recreational motor vehicle franchisors and
franchisees from the relevant market area provision of the bill.

The period for temporary ownership of a dealership for
franchisors of recreational vehicles may be extended in
increments of 12 months for a maximum extension of 60 months if
a good cause is shown.  Recreational motor vehicle franchisors
and franchisees are exempt from the provision allowing
franchisors to own a minority interest in an entity that owns
dealerships of the same line-make manufactured and franchised by
the factory under certain conditions.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the bill is an agreement
between dealers and manufacturers over many issues relating to
the new vehicle retail business which has been a problem for
several years.

Testifying for the bill were Representative O'Connor; Missouri
Motor Vehicle Dealers Association; Alliance of Automobile
Manufacturers; and Recreational Motor Vehicle Association.

OPPONENTS:  There was no opposition voiced to the committee.

Robert Triplett, Legislative Analyst

Missouri House of Representatives
Last Updated November 26, 2001 at 11:44 am